Oil Hovering Near 3-Month Highs

Oil prices were steady on Tuesday, hovering near three-month highs as signs of tighter supplies and pledges by Chinese authorities to shore up the world's second-biggest economy lifted sentiment, while weaker Western economic data weighed. Brent futures were down 4 cents, or 0.05%, at US$82.70 a barrel by 0823 GMT, while US West Texas Intermediate (WTI) crude was stable at US$78.74. The crude benchmarks are on track for their fifth weekly gain in a row, with supplies expected to tighten due to output cuts from the Organization of the Petroleum Exporting Countries (OPEC) and allies.

Earlier-loading Brent contracts are selling above later loadings, a price structure known as backwardation indicating traders see tight supply, with the six-month spread near a two-and-a-half month high. Industry data on US crude inventories is expected at around 2030 GMT. Four analysts polled by Reuters estimated on average that crude inventories fell by about 2 million barrels in the week to July 21. In China, the world's second-largest economy and second-biggest oil consumer, leaders pledged to step up economic policy support.

Business activity in the euro zone shrank more than expected in July, a survey showed. In the US, business activity slowed to a five-month low in July, a closely watched survey showed, but falling input prices and slower hiring indicate the Federal Reserve could be making progress on its bid to reduce inflation. Sending a bearish signal, a 110,000 barrel-per-day unit at the huge US refinery in Baton Rouge will be shut for up to four weeks, sources said. Investors have priced in quarter-point hikes from the Fed and European Central Bank this week, so the focus will be on what Fed Chair Jerome Powell and ECB President Christine Lagarde say about future rate increases.